The City of London is struggling with a productivity headache, and Brexit is being blamed for the UK's £20 billion shortfall in output growth. The Chancellor, Rachel Reeves, has put the squeeze on her team to come up with big tax rises and spending cuts to address the issue, citing the 2016 leave vote as the root cause of Britain's recent economic weakness.
According to Rob Rooney, who led Morgan Stanley's relocation from London to Frankfurt during his time in the US investment bank, the impact of Brexit on the City is clear. "Frankfurt, Madrid, Milan and Paris are all doing better than they were," he said. "There is no question about that." Rooney moved hundreds of bankers and billions of pounds of assets to Frankfurt to sidestep Britain's shock EU departure, with over 440 other City companies following suit.
Reeves has blamed Brexit for the UK's recent growth weakness and an expected downgrade in the public finances, citing a weaker productivity forecast from the Office for Budget Responsibility (OBR). The OBR is now expected to cut its forecast for trend productivity growth to about 0.9%, adding roughly £21 billion to government borrowing by the end of the decade.
Experts say that Brexit has played a significant role in exacerbating the post-2008 slump, hitting sectors with EU ties and leading businesses to put investments on ice. Erecting tougher trade barriers with the UK's largest partner is expected to cut Britain's long-term productivity by about 4% relative to a remain scenario.
The City's finance sector has been hit hard since the end of the EU transition period at the end of 2020, with exports falling significantly behind the G7 average. Cars, chemicals, pharmaceuticals, and food have all slumped in relative terms, while services exports have outperformed but not enough to compensate for the decline.
Reeves is expected to tell the watchdog that Labour's policies can turn around the UK's weak productivity performance, citing positive contributions from planning reforms, cutting business red tape, and trade agreements. However, by blaming Brexit, Labour may run into trouble amid its refusal to entertain rejoining the EU single market or customs union.
The challenge facing Reeves is ensuring that the City remains competitive without relying on unsustainable profits made via excessive risk-taking. Many economists issue a warning that Britain has a "finance curse" from hosting a global industry that crowds out other sectors and stokes inequality.
For Rooney, however, London's future as a financial hub is vital, and he believes that the UK needs to figure out how to tap into its creative potential and attract more finance startups. As the chief executive of Hyperlayer, a UK-based financial technology firm, Rooney sees an opportunity for growth in the City but also acknowledges the challenges ahead.
According to Rob Rooney, who led Morgan Stanley's relocation from London to Frankfurt during his time in the US investment bank, the impact of Brexit on the City is clear. "Frankfurt, Madrid, Milan and Paris are all doing better than they were," he said. "There is no question about that." Rooney moved hundreds of bankers and billions of pounds of assets to Frankfurt to sidestep Britain's shock EU departure, with over 440 other City companies following suit.
Reeves has blamed Brexit for the UK's recent growth weakness and an expected downgrade in the public finances, citing a weaker productivity forecast from the Office for Budget Responsibility (OBR). The OBR is now expected to cut its forecast for trend productivity growth to about 0.9%, adding roughly £21 billion to government borrowing by the end of the decade.
Experts say that Brexit has played a significant role in exacerbating the post-2008 slump, hitting sectors with EU ties and leading businesses to put investments on ice. Erecting tougher trade barriers with the UK's largest partner is expected to cut Britain's long-term productivity by about 4% relative to a remain scenario.
The City's finance sector has been hit hard since the end of the EU transition period at the end of 2020, with exports falling significantly behind the G7 average. Cars, chemicals, pharmaceuticals, and food have all slumped in relative terms, while services exports have outperformed but not enough to compensate for the decline.
Reeves is expected to tell the watchdog that Labour's policies can turn around the UK's weak productivity performance, citing positive contributions from planning reforms, cutting business red tape, and trade agreements. However, by blaming Brexit, Labour may run into trouble amid its refusal to entertain rejoining the EU single market or customs union.
The challenge facing Reeves is ensuring that the City remains competitive without relying on unsustainable profits made via excessive risk-taking. Many economists issue a warning that Britain has a "finance curse" from hosting a global industry that crowds out other sectors and stokes inequality.
For Rooney, however, London's future as a financial hub is vital, and he believes that the UK needs to figure out how to tap into its creative potential and attract more finance startups. As the chief executive of Hyperlayer, a UK-based financial technology firm, Rooney sees an opportunity for growth in the City but also acknowledges the challenges ahead.
. It seems to me that the Brexit factor is being unfairly scapegoated by the government 
. While it's true that the UK's EU departure has had significant consequences, I think it's a bit simplistic to blame Brexit for the entire £20 billion shortfall in output growth 
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. Moreover, with the rise of Frankfurt and other European hubs, it's evident that some industries are simply shifting their operations to more favorable regulatory environments 
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. As Rooney pointed out, London is still a vital financial hub, but it needs to adapt to changing circumstances and find sustainable growth strategies 
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Brexit is like a total nightmare for the City of London fam 
. I'm literally shook by how much growth they're missing out on 
. Morgan Stanley's Rob Rooney is straight fire saying that Frankfurt, Madrid, Milan, and Paris are doing way better than them 
. Like, no wonder all those companies moved to Frankfurt 
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. Um, okay, but what about the lack of investment in other sectors? 
. It's just a fancy way of saying that the City gets too big for its britches 
. They need to stop relying on risk-taking profits and start attracting more startups 
. Maybe if they focused on innovation instead of just being a hub for super rich people 
, they could actually grow their economy 
And what about all these startups that need to thrive in the City? We need to give them the support they need, not just rely on old-school finance profs like Rachel Reeves. 
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. This is a wake-up call for policymakers to rethink their approach and focus on creating a more balanced economy that benefits all sectors, not just finance 
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. The UK needs a more nuanced approach to growth that prioritizes long-term sustainability over short-term gains 
. I think it's a bit of a complex issue, though - on one hand, Brexit did lead to some major changes and uncertainties 
. On the other hand, the City was already kinda reliant on unsustainable profits 
. If they're trying to make it sound like a silver bullet, people might get skeptical 
The City needs to find a way to adapt and grow without relying too much on risk-taking 
the finance curse thing is interesting too - maybe we need to find a new way of doing things that doesn't just focus on profits 
. Brexit has definitely had an impact, especially for sectors that rely heavily on EU trade 
. We can't rely on high-risk investments to drive growth; we need a more sustainable approach 
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. Overall, I think Reeves has a tough challenge ahead, but with the right strategy, London can bounce back from this slump 
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Is that just a fancy way of sayin' the City's got too much influence and crowds out other sectors? I get it, inequality is a problem, but we can't just blame Brexit for everythin' 
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It's no wonder experts say Brexit played a significant role in exacerbating the post-2008 slump 
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does anyone know how many bankers moved away from london?
